E-commerce live streaming, $63B industry, explained

His name is Li Jiaqi, her name is Viya they are top two live streamers of Chinese online shopping apps. These two guys, they made a combined sales of four hundred million dollars in just one day, that’s equivalent to the revenue of ten Macy’s stores in a year. This is a new phenomena in China known as E-commerce live-streaming. E-commerce live streaming starting 2016, in just 3 years, the market is hitting 63 billion this year. That is six times the size of u.s. box office revenue. So today let’s talk about this live streaming in e-commerce. How does it work? Why has it been so successful and what the future might look like? But before jumping today’s topic, I also want to provide some context about e-commerce in China. China has undeniably the largest online retail market in the world. The market is estimated to reach 1.5 trillion in 2019. That’s not just larger than online markets in the US, UK, Japan, Germany, France, Canada, Korea, Russia, India, Indonesia, Brazil, Argentina. It’s larger than the next ten markets combined. So despite the enormous size of the market, it is still growing more than 20% every year and you can imagine the innovations happening in industry that fuel the growth and livestreaming is definitely one of the drivers in recent years.

So how does it actually look like in real life? Here is a demo. Let’s go tap into one ecommerce app, go to the live streaming section and you will see many stores doing live streaming. Let’s go pick one, so this live-streamer, she’s trying on her own store-designed coat, not only you’ve got to see how a coat fits into a real person, you can even ask her questions here and she will respond to you in real time.

If you are interested in learning more about the products, the product link is right below, and if you click on that, it will direct you to the product page where you can learn more details, make a purchase while the live streaming is still on a page. And you can just switch between the product page and live streaming seamlessly. So now the question is why this format of selling is able to create an industry of 63 billion. I think there are three reasons. Number one, fundamentally it is adding one element that has been missing in online shopping since its birth, that is – human. So think about what information you have when you are shopping at amazon.com today? You have texts, images, reviews. Now live streaming just completely transformed the way you can learn about products online. You basically let a salesperson demonstrate all the possible details about a product in some way not even possible today in physical stores. Like every time I go to a lipstick counters, I wish I wish I could try out all the colors, but in reality I wouldn’t try more than three.

Now with live streaming they just made the dream come true check out the guy here. Tom Ford. Full-range testing! Now burberry. The most popular burberry stripes Now let’s test chanel! color #112 color #114 Guerlain Queen lipstick, limited edition wow, goddess OMG… I feel like my lips are shining I don’t remember how many lipsticks I bought because of his live streaming, it’s so irresistible and compelling! Anyway let’s talk about reason number two branding ecosystem. In the US, if brands want to do digital marketing, they have to go to Google search or Facebook. Today in China, live streaming in e-commerce has become a norm for marketers. Brands of all kinds you can think of they have all done live streaming this year’s. Head & Shoulders, Nestle, Estee Lauder, Adidas, Yves Saint Laurent. You name it. And more brands participating, the more discount those companies are willing to give away in order to stay competitive and as a result more consumers are attracted to watch live streaming. Because more users start to watch live streaming, more brands start to do live streaming.

The cycle just goes on and on on. This year more than 150 million people have watched live streaming at least once, that’s half of the US population. The last reason has to do with technology when live streaming in e-commerce started 3 years ago, the most traffic only came in the evening when people got connected to Wi-Fi. Now thanks to the adoption of 4G, people can watch videos at anytime anywhere. This has largely contributed to the increasing traffic. So now the industry has grown to 63 billion, doubled the size of last year. The question then is – will the momentum continue? My personal observation is yes also for three reasons Reason number one – 5G. With the arrival of 5g, it will deliver some of the performance not possible today. For example how can a brand claim that their product is so effective cleaning your pores while the result is not visually accessible to you online? But that’s gonna possible in the future with the video quality empowered by 5G. Reason number 2: live streaming will bring more product categories to online shopping.

So some product categories are more adopted in online environment than others like electronics in China, half of the revenue comes from online today versus categories like car, furniture, jewelry, the penetration is below 10 percent, which makes sense you do need more visual and experiential information to make purchase decision which is exactly what live streaming can offer. Reason number three – live streaming will improve supply chain efficiency and therefore accelerating product selling cycle. Let’s say your store sells handbags. Today the product cycle might look like this: You design, produce, distribute, display and consumers make orders. From a design to reaching end-users they probably take six month. With live streaming, however, because you can get consumer feedback so fast and get a pretty good estimate of purchase intent. It’s possible to go from a design directly to the consumer orders.

And this way not only saves your inventory cost, but also makes you sell more. With that, I’m pretty optimistic about the future of e-commerce live streaming. Before closing off I just want to share one last thought. Chinese online shopping started in 2003 with the launch of Taobao, owned by Alibaba. Now it has 750 million users, more than twice the number of Amazon’s users globally. In 2004, the first mobile online payment was introduced, Alipay. Now it has users 1.2 billion, three times the number of Apple Pay’s users globally. In 2009 first shopping festival Singles day was born, and this year it delivered a whopping 38 billion sales in 24 hours, four times the size of Cyber Monday sales in the US. while I was doing research about this industry, I actually couldn’t find any equivalent in the US market.

Do you think that’s something applicable to the US market at all? Leave your comments below. Let me know! Thank you so much for watching! Next week I will be talking about Ten Moments in China Tech of This Decade. Stay tuned!.

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